Tax & Accounting News

Second HMRC offshore bank account amnesty?

28/11/2007

Britons holding money in offshore bank accounts may be offered a second “amnesty” in an HM Revenue & Customs crackdown on offshore tax evasion.

In a televised interview on 15 November, HMRC director general Dave Hartnett suggested that a similar exercise would be launched, while adding: “We haven’t quite worked out how to do it yet.”

However, there has so far been no formal announcement although on 19 November, the Financial Times reported that HMRC was concerned that it would be unfair to give people a second chance when they should have taken advantage of the first amnesty.

Under the original amnesty, launched on 17 April 2007, the holders of offshore bank accounts had until 22 June to notify HMRC that they intended to disclose unpaid tax on offshore accounts, as well as any other undeclared liabilities, going back up to 20 years.

In return, HMRC agreed that the investors who admitted that they owed tax would receive penalties limited to ten per cent of the outstanding bill, with no penalties on unpaid taxes of less than £2,500. The deadline to make the disclosure, and pay all taxes, duties, interest and penalties was 26 November 2007.

HMRC has warned that it will target anyone failing to make a disclosure with penalties of up to 100 per cent of the tax due. Mr Hartnett has stated that up to 30,000 people were under investigation because HMRC considered they should have made a disclosure.

The amnesty came after Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB were forced to hand over details of customers with offshore accounts to HMRC.

The “big five” banks notified offshore customers of the amnesty but clients of other banks may not have been aware of the Revenue’s action. Now HMRC is seeking offshore account details from around 175 banks and other financial institutions.

Around three million UK residents have offshore accounts, with a total value of about £180 billion. Such accounts are entirely legal, but it is against the law to conceal income earned from deposits. Reports suggest that HMRC expects to recoup around £500 million from the original amnesty.

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